First Home Buyers Guarantee Scheme Draws Higher-Income Australians, Driving Price Growth
Higher earning Australians flocking to 5 first – Since the removal of income restrictions in late 2025, the Australian government’s First Home Buyers Guarantee Scheme has seen a surge in participation from high earners, with some participants reporting incomes exceeding $200,000. This shift has raised concerns among economists, who argue that the program’s expansion has accelerated property price increases by enabling more buyers to enter the market. The policy, initially designed to support first-time buyers with limited savings, now appears to be favoring those in stronger financial positions, potentially undermining its original purpose.
Expanded Access and Borrowing Capacity
The scheme, which allows borrowers to access 95% of a property’s value with minimal upfront costs, has become a cornerstone of government housing support. Data from Housing Australia, shared with Guardian Australia, reveals that between October 1 and April 30, the program facilitated 15,924 single-borrower loans and 23,790 joint loans. This totals 39,714 government-backed loans, with 13,979 of them involving participants who surpassed the former income caps. Among these, 6,812 single borrowers earned over $125,000, while 7,167 joint applicants combined incomes exceeding $200,000.
At the highest end, nearly 1,000 single Australians with incomes of $200,000 or more, and 1,251 couples earning a combined $275,000 or more, utilized the scheme to secure 5% deposits. This indicates that the policy’s adjustments have not only broadened access but also created opportunities for those with greater financial flexibility. While the goal of the scheme was to reduce barriers for first-time buyers, the data suggests it may have inadvertently redirected support to a more affluent segment of the market.
Historical Context and Policy Shifts
The 5% deposit initiative was first introduced by the Coalition government as a tool to assist lower-income buyers. Under the previous framework, single borrowers were limited to $125,000 in annual income, while joint applicants faced a combined cap of $200,000. These limits were intended to ensure the program focused on those most in need of financial assistance. However, in 2025, the Labor government removed these caps, fulfilling a key promise during the election campaign. The change has allowed a broader range of applicants to qualify, including those with higher earnings, which some analysts say has diluted the program’s intended impact.
The removal of income restrictions was part of a larger effort to streamline the first home buyer support system. By eliminating caps, the policy aimed to make it easier for individuals to enter the property market, regardless of their income level. Yet, the result has been a significant increase in demand, particularly in major cities where property prices have risen sharply. For instance, in Sydney, the government now supports homes priced up to $1.5 million, while in Brisbane, the cap extends to $1 million. Smaller cities like Hobart and Perth have seen even more lenient thresholds, with combined price limits as low as $700,000.
Expert Perspectives on the Scheme’s Effectiveness
“The removal of income caps has meant support flows to those in more stable financial positions,” said Amy Auster, chief executive of Policy Institute Australia. “While government assistance is a valuable tool, it traditionally targets individuals facing the greatest financial strain. This shift may have created a new dynamic where the most advantaged buyers are the ones benefiting most.”
Auster emphasized that the scheme’s expansion, though well-intentioned, has not addressed the core issue of affordability for lower-income buyers. “There has been a consistent effort to support first-time home buyers, and I understand the rationale,” she noted. “However, the data shows that the program hasn’t significantly altered the broader trends in home ownership.”
Independent economist Saul Eslake echoed similar concerns, highlighting how the scheme’s adjustments have allowed buyers to commit to larger mortgages than they would have otherwise. “The way the program was expanded by the Albanese government directly contributes to the current housing challenges,” Eslake stated. “When governments create mechanisms that enable people to spend more on housing, the result is increased demand and higher prices.”
Eslake pointed to the example of a borrower with $50,000 in savings. If required to make a 20% deposit, this individual would have been limited to a $200,000 loan. But under the 5% deposit scheme, they can now access up to $1 million in financing. This expanded borrowing capacity has fueled competition in the market, particularly in areas where property values have climbed rapidly.
Market Trends and Long-Term Implications
Cotality’s analysis of property price movements shows that homes under the revised price caps experienced faster growth than those above them once the scheme was expanded. In early 2025, before the caps were lifted, price increases in lower-tier homes were modest. However, after the government broadened eligibility, these properties saw a more pronounced rise, suggesting that the program has intensified demand in certain regions.
Despite the scheme’s rollout, the overall trend in first home buyer activity has remained stable. The Australian Bureau of Statistics reports that the average number of first home buyer loans across Australia dropped slightly after the expansion, indicating a possible market slowdown. From October to March, the monthly average of government-backed loans was 10,181, a decline from the prior six months’ average of 9,900. This suggests that while the scheme has attracted more high-earning participants, it has yet to catalyze a widespread surge in home ownership.
Moreover, the government’s support has not necessarily translated into lower prices or more accessible housing. In fact, the increase in borrowing capacity has led to higher debt levels for many buyers, with some taking on mortgages that far exceed their initial savings. This has raised questions about the long-term sustainability of the program, as well as its ability to stabilize the market for first-time buyers.
As the housing market faces a downturn, the scheme’s role in maintaining demand remains under scrutiny. While it has provided a temporary boost to buyer confidence, experts warn that its focus on higher earners may leave lower-income buyers struggling to afford homes. The data underscores a growing divide, with the policy’s benefits increasingly concentrated among those who already have the means to purchase property. For the program to achieve its intended goal, further adjustments may be needed to ensure equitable access and meaningful support for all first-time buyers.
The expansion of the First Home Buyers Guarantee Scheme has sparked debate about its effectiveness. While it has lowered the deposit barrier for many, it has also created opportunities for wealthier individuals to secure homes with less upfront investment. As prices continue to rise, the question remains: does this policy truly help first-time buyers, or does it simply shift the dynamics of the market in favor of those with greater financial resources?
